Europe sales drop in March as EV weakness persists

New-car sales in Europe fell 2.8 percent in March as automakers including Volkswagen Group and Stellantis faced weaker demand, particularly for electric vehicles.

New-vehicle registrations dropped to 1.38 million units last month in the EU, EFTA and U.K. markets, the industry body ACEA said Thursday in a statement.

Sales of battery electric cars fell 11 percent as consumers in Germany, Sweden and Norway cooled.

The decline, due in part to the timing of Easter, is the second in four months and underscores the pressure automakers face amid higher interest rates, weaker economic growth and the phasing out of generous subsidies to stoke demand for EVs.

VW, Mercedes-Benz and Tesla have all reported lower EV sales in the first quarter of the year.

The trend is pushing some traditional automakers to rethink when they will phase out combustion engines, and others have backtracked on EV targets.

In February, Mercedes pushed back its sales forecast and now expects BEVs to be stuck at less than half of its sales for longer than anticipated.

The impact of the slowdown has been starkest at Tesla, which this week said it will shed more than 10 percent of its global workforce.

Italy’s EV sales declined 34 percent last month as customers held back purchases in anticipation of possible new subsidies under consideration by the government.

Germany’s EV sales slumped 29 percent, even as manufacturers such as VW introduced their own rebates in a bid to compensate for the country’s aid cuts.

While a range of new BEVs convinced a greater number of buyers in markets including France and U.K., sub-par charging infrastructure remains a roadblock to more widespread adoption.

Some customers are turning to models with both a battery and a combustion engine: Sales of plug-in hybrid vehicles rose 0.7 percent last month, outpacing not just full-electric cars but also models running on gasoline.

Sales of gasoline cars in the region dropped 8 percent while diesel cars registrations plunged as much as 18 percent.